Russia central bank: current rates enough to withstand more U.S. sanctions

Reuters Staff

2 Min Read

MOSCOW, Dec 1 (Reuters) - The Russian central bank considers current interest rates sufficient to withstand the shocks if the United States extends economic sanctions against Moscow, the head of the bank’s research department, Alexander Morozov, said on Friday.

The United States is considering expanding sanctions against Russia next year and may impose restrictions on buying Russian treasury bonds, known as OFZs, that are popular among international investors for their high yields.

The central bank’s key rate level of 8.25 percent “allows to avoid rapid moves even in case of unfavourable developments,” said Morozov when asked if the central bank would consider raising rate to address possible market turbulence after new sanctions.

The central bank last raised rates sharply in late 2014, to 17 percent from 10.5 percent, when the rouble fell to record lows amid falling oil prices and the Western sanctions imposed to punish Moscow for the annexation of Crimea and its role in the Ukrainian crisis.

The central bank, which is expected to lower rates in the next year or two, has recently played down a possible aftermath of any new sanctions.

Foreign market players say Russian OFZ bonds are likely to remain among the favourite picks for global investors next year, despite possible sanctions and a dip in yields in line with falling interest rates. (Reporting by Elena Fabrichnaya, writing by Andrey Ostroukh, editing by Larry King)